There is nothing law-breaking about tax avoidance and this is of course the point. The law is rigged in favour of the wealthy and the state is at the service of the rich.
In the Independent on Sunday, Owen Jones wrote a fantastic article about one of the the critical issues of the day, tax, and the how the biggest companies of our time avoid paying their fare share.
And here’s an extract:
Eric Schmidt is an ambitious sort of bloke. The chairman of Google says his tax-avoiding company “has always aspired to do the right thing.”
Well, I’ve always aspired to go the gym three times a week, learn Spanish and play the guitar. None of these things are going to happen, of course.
This is the scandal that currently happens in modern Britain. While low-paid and disabled people are having their state support shredded – no money left, you see – corporate giants like Google are allowed to get away with paying a pittance. From 2007 onwards, the company made £11.9bn worth of revenues in Britain, but gave the taxman only around £10m in corporation tax. Here’s their entirely legal scam: their British sales are registered in Ireland, meaning they technically don’t have to cough up here. Clever, eh?
Google aren’t the only company gifted with an infinite supply of smugness courtesy of a slick team of accountants and lawyers. Amazon.co.uk is British: the clue is in the name. Yet because it directs its sales through Luxembourg, it has paid just £2.4m tax on sales worth £4.2bn. Starbucks use all sort of clever tricks: routing profits through Switzerland, using foreign entities to make it look as if they’re not making any profits in Britain. Ingenious, really. Or, as Margaret Hodge, the crusading chair of the Public Accounts Committee, might put it, “devious” and “unethical”.
The truth is, life becomes a lot cheaper when you are rich. The average taxpayer or small business cannot afford an army of accountants to systematically exploit every possible loophole to divert their profits to Bermuda or Ireland.
And while the 0.7 per cent of social security spending lost to fraud costs the taxpayer £1.2bn, tax justice pioneer and chartered accountant Richard Murphy estimates avoidance is worth £25bn a year. Guess which one the state cracks down on without mercy or hesitation?
Ah – an objector might say – but benefit fraud is illegal, and there is nothing law-breaking about tax avoidance. This is of course the point. The law is rigged in favour of the wealthy: the state is at the service of rich types who don’t fancy paying their taxes. Accountancy firms like PricewaterhouseCooper and Deloitte get their teams seconded to the Treasury, help draw up tax laws, then go off and give advice to multinational companies on how to get around legislation they’ve helped create. Multimillion-pound lobbyists put pressure on policy makers. No such assistance for the poor, though. Get 50 quid cash in hand when you’re claiming benefits, and it’s game over.
A few years ago, the issue of tax avoidance languished on the fringes: it was something wonks and geeks worried about. Everyone is now talking about it because an inspirational motley crew of activists called UK Uncut started occupying shops and banks who were guilty of scamming the taxpayer. They stand in Britain’s fine tradition of peaceful civil disobedience, and show it is not just right-wing fronts like the Taxpayers’ Alliance who can create political space – the left can do it, too, with a bit of nous. They helped draw attention to the likes of Richard Murphy, who has drawn up suggested detailed legislation to crack down on the avoiders. Ed Miliband is now pledging an offensive against tax avoidance. Protest works.